Probate can be a lengthy and expensive process for heirs after the death of a loved one. As a result, many individuals seek to avoid probate by using estate planning tools such as wills, trusts, and beneficiary designations. One tool used in other states is a Transfer on Death (TOD) deed, which allows real estate to pass directly to a beneficiary upon the property owner’s death, bypassing probate. However, when it comes to New York, the rules surrounding TOD deeds differ from those in other states.
What is a Transfer on Death (TOD) Deed?
A transfer-on-death (TOD) deed is a legal document that allows real estate property to transfer directly to a named beneficiary upon the owner’s death without going through probate. Essentially, it functions like a beneficiary designation for real estate, similar to how payable-on-death designations work for bank accounts. The property owner retains full control over the property during their lifetime and can sell or mortgage it, change the beneficiary, or revoke the TOD deed at any time.
Is a TOD Deed Available in New York?
Currently, New York State does not recognize Transfer on Death (TOD) deeds for real estate. Although many states have enacted laws allowing TOD deeds for real property, New York remains one of the states where this option is unavailable. This means that in New York, real estate generally has to go through the probate process if it is solely owned at the time of the owner’s death unless other estate planning tools are utilized to avoid probate.
Alternatives to a TOD Deed in New York
Since TOD deeds are not available in New York, individuals seeking to avoid probate for real estate must rely on other legal methods. Several alternatives are available for estate planning in New York that can help bypass probate:
1. Establishing a Revocable Living Trust
One of the most effective tools to avoid probate in New York is the creation of a revocable living trust. A revocable trust allows you to transfer ownership of your real estate and other assets into the trust during your lifetime. As the trustee, you retain control over the assets and can change or revoke the trust at any time. Upon your death, the successor trustee you designate will manage the distribution of assets to your beneficiaries without the need for probate.
Transferring real estate to a revocable trust ensures that the property is not subject to probate, saving your heirs both time and money. Additionally, a revocable trust provides more privacy since trust documents are not made public in the same way that probate records are.
2. Joint Ownership with Rights of Survivorship
Another method to avoid probate is to hold property as joint tenants with rights of survivorship. When two or more people own property jointly with rights of survivorship, the property automatically passes to the surviving owner(s) upon the death of one of the owners. This transfer happens outside of probate, making it a common strategy for married couples and others who own property together.
However, joint ownership may not be suitable for everyone. For example, adding a child or another relative as a joint owner can expose the property to the co-owner’s creditors or legal issues. It’s important to carefully consider joint ownership’s potential risks and benefits and consult with an estate planning attorney.
3. Life Estate Deed
A life estate deed is another option that can transfer property outside of probate. With a life estate deed, the property owner retains the right to use and live in the property during their lifetime. Still, upon their death, ownership automatically transfers to the named beneficiary (remainder interest holder). Because the transfer happens upon death, the property does not need to go through probate.
Life estate deeds have their drawbacks, including limited flexibility. Once a life estate deed is executed, it can be not easy to sell or mortgage the property without the consent of the remainder beneficiary. It is important to consider these limitations when exploring estate planning options.
Why Avoid Probate in New York?
Probate in New York can be complicated, time-consuming, and costly. If real estate goes through probate, it becomes part of the public record, and the executor must follow a specific legal process to administer the estate. This can delay the distribution of property and expose the estate to additional fees, such as court costs and executor’s fees.
Additionally, probate opens the door to potential disputes among beneficiaries or creditors. For these reasons, many individuals seek to avoid probate when planning to transfer their real estate assets.
Consulting with an Estate Planning Attorney
Since Transfer on Death deeds is not available in New York, working with an experienced estate planning attorney who can guide you through alternative probate-avoidance strategies is essential. An attorney will be familiar with New York’s estate laws and can help you choose the most appropriate tools based on your specific situation and goals.
At Morgan Legal Group, we specialize in creating customized estate plans for individuals and families in New York. Whether you want to set up a trust, create a joint ownership arrangement, or explore other ways to avoid probate, our attorneys are here to help you navigate the complexities of estate planning.
Conclusion
While Transfer on Death deeds is not an option in New York, several effective strategies remain to avoid probate and efficiently transfer your real estate to your heirs. Whether through a revocable trust, joint ownership, or a life estate deed, working with a knowledgeable estate planning attorney will help you achieve your goals and avoid unnecessary legal challenges.
Contact Morgan Legal Group today to schedule a consultation and begin planning for your estate’s future. Let us help you explore your options for protecting your assets and ensuring a smooth transition for your loved ones.